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When Loren Bendele started online coupon company Savings.com in 2007, he wondered why
traditional paper coupon companies didn't have more of an
internet presence. It was a simple idea that filled a niche in
an established market.

While his marketing plan initially was designed to attract
customers, it also was meant to gain the attention of prospective
acquirers--and it did. In June 2012 Bendele sold Savings.com to
Cox Target Media, parent company of Valpak, for a reported $100
million.

"We always thought the traditional coupon players would be
looking for ways to migrate their business," Bendele explains. So
he intentionally built his company to sell.

Ken Wisnefski, meanwhile, has flipped two companies and now runs
Mount Laurel, N.J.-based WebiMax, which provides internet
marketing services such as search engine optimization. His first
tip on building a business to sell? "You should treat [each
company] as though you are going to keep it for 100 years," he
says.

In other words, starting a company with the intention to flip is
not so different from starting any company, but it does come with
its own set of guidelines.

"With very few exceptions, startups get bought, they don't go
public," says Nat Burgess, president of Bothell, Wash.-based
Corum Group, which provides mergers and acquisitions advice for
the software industry. "The ones that go public go through so
many funding rounds and recapitalizations that they are
thoroughly vetted by the time they file for IPO. For the other 99
percent of startup companies, proper planning and strategy are
critical to a successful sale. Without a good business, quality
team and solid execution, there is no exit."

Nate Redmond, managing partner at Rustic Canyon Ventures in Santa
Monica, Calif., was one of the venture funders of Savings.com. He
stresses that the business itself is more important than any exit
strategy. "Rarely do we make an investment with the stated intent
to sell," he says. Instead, the investment decision is based on
market conditions, competitive position and company execution.
"The best companies are bought, not sold," he adds. "We believe
it is important to keep the focus on the long-term horizon until
buyers come calling."

However, nearly every entrepreneur and investor who has been
through a sale says there are crucial ingredients to any exit
plan. Above all, the company needs an easily adaptable product or
concept, clean books, good old-fashioned buzz, delegated
authority and attention to the customer mix. Finally, the details
of daily management have to support a company's long-term growth.
"Startups get acquired because the acquirer believes they can
scale up the company," Burgess says. "If the company is held
together with duct tape and baling wire, it won't scale. Even
though they start small, entrepreneurs have to think big from day
one."

Follow these rules to fine-tune your exit strategy.

Rule 1: Carefully consider the shareholder
mix.
Companies need a shareholder agreement and shareholder base that
will make thoughtful decisions when it comes time to flip.
"Taking capital from a strategic investor that is also a
competitor could block a proposed sale," Burgess says. "It is
flattering to be courted by a large company that wants to own a
piece of your startup, but you may not be able to sell to their
competitor, even if all the other shareholders favor the deal."

Equally damaging, he adds, is a scenario in which one shareholder
has unrealistic valuation expectations and blocks the sale or
exercises dissenter rights. In particular, this can be an issue
with relatively inexperienced angel investors.

Bendele pursued financing that would support his goal of selling.
He kept the capitalization table simple and worked with a fairly
small number of investors: U.S. Venture Partners, Rustic Canyon
and several angels. Additionally, his relatively simple product
and business model were designed to be smoothly integrated into
an acquiring company. That made it easier to get a consensus when
the offer from Cox Target Media came.

At WebiMax, meanwhile, the employees have a say: Wisnefski gave
an ownership stake to the staff through a profit-sharing program.
"It gives everyone a good feeling if the company should actually
sell," he says. Employees tend to be more supportive of new
owners if they have had a voice in--and shared in the profits
of--their company's sale.

Rule 2: Keep it clean.
It's not just the product concept that needs to be simple, but
the business structure, too. The founder's own investment in the
company he or she is attempting to flip must be free of
entanglements. Wisnefski, for one, says he has learned to keep
his transactions transparent and to track them diligently.

It's easy for entrepreneurs to get sloppy about putting money
into and taking money out of their own company. What's more, if
founders are arguing about ownership, the buyer is likely to
balk. Wisnefski cautions that anyone planning to sell should
avoid commingling of personal and company funds.

Clean financing goes beyond the ownership structure. Wisnefski
stresses that buyers are looking out for inconsistencies; if the
due diligence doesn't match up with the presentation, they get
skittish. Such inconsistencies may stem from legal issues, asset
valuation, procedural problems or even employee relationships.

"Make sure everything is completely closed down," Wisnefski says.
"If you have issues, make sure they are in the forefront." It may
cost a little in terms of valuation, but full disclosure saves
time and money all around--and can make or break a deal.

Rule 3: Know your audience and your
market.
Every new company should have a thorough market analysis. For a
business that aims to be sold, part of that is determining who
potential acquirers might be. "It's a good idea to look around
the space and see what kinds of transactions are out there,"
Wisnefski says. Some businesses are easier to sell than others,
and most have competitors that would also be willing to entertain
an offer.

Yet Wisnefski cautions against getting overly excited about
bubble valuations: For every Instagram selling for $1 billion,
there is a Digg selling for $500,000; for every Digg, there is a
company that disappeared into obscurity.

Rule 4: Delegate.
Many new companies revolve around their founders; a business
built to flip cannot. "You want to build a culture, not a cult,"
Bendele says. Part of that is distributing responsibilities
throughout the organization. The buyer needs to know that the
business can survive without the founder, and the founder needs
to concentrate on growing the company, rather than taking care of
day-to-day operations.

As part of its management system, Savings.com relies on an
internal wiki provided by Atlassian, an Australian software
company. All employees use it to list their roles,
responsibilities, sales reports and related information. It helps
Bendele run the business better, and it makes it easy for
potential buyers to see what exactly goes on within the company
at a fundamental level.

Rule 5: Choose staff and customers wisely.
One area that Bendele had to address was personnel. "When you
start a business, you can't always bring in the people you need
to sell a business," he says. His early hires were relatively
green junior staffers. As the company grew, Savings.com was in a
better position to make more experienced hires.

It is never easy to let people go, Bendele says of his decision
to replace early workers, but it became necessary as he
approached the possibility of a sale. "I really stayed true to my
word that I wanted to do what was best for the business," he
says.

Entrepreneurs also need to consider their ideal customer base. "A
startup that is eager to win an early customer may bend over
backward to accommodate their demands, rather than negotiating
through them or walking away," Corum Group's Burgess says.

But some customer agreements could turn off potential acquirers.
Often, large companies ask for and receive contract terms that
protect their interests, such as source-code escrows or other
rights in intellectual property, uncapped services obligations
and change-of-ownership controls. Such relationships will likely
affect the value of your company to a potential acquirer.
Further, having a customer who is a competitor of a possible
acquirer could kill a deal outright.

Rule 6: Toot your horn.
If you've followed the first five rules, the sixth should be
easy: Tell folks what you've done. Good buzz from a public or
media relations campaign is crucial for driving interest among
consumers and potential acquirers, as was the case for
Savings.com. Invest in a marketing campaign that includes
effective SEO strategies, and in analytics that demonstrate your
product's value.

It all comes down to building a company that's smartly run and
transparent--like every business should be. No matter your
long-term intentions upon launch, the basic rules are the same.
As Bendele says, "You spend about 5 percent of your time thinking
about your exit and the other 95 percent building a real
business."